JioPhone Next’s EMI options may impact Airtel
The much-talked about Reliance Jio’s entry-level 4G smartphone JioPhone Next will be available for sale from Diwali. The handset will be available for ₹6,499 or an upfront payment plus processing fees of ₹2,500 and 18-24 months equated monthly installments ranging from ₹300- ₹600, offering different bundled data and voice services.
Analysts at Emkay Global Financial Services Ltd, looking at the device cost, believe that the target audience for this is mid-segment subscribers, i.e., customers using mobile phones in the range of ₹5,000- ₹8,000. Apart from first time users, replacement demand could be a big potential opportunity to gain volumes as upfront cost to consumer reduces meaningfully with EMI offers, said the Emkay report.
So, what does this mean for rival Bharti Airtel’s subscribers base?
“Based on our calculations, Jio’s plans (adj. for the cost of the handset) on a monthly basis place it at a 16-20% discount (for the most commonly utilised 1.5GB/day and 2GB/day plans) to Bharti’s current offerings. This is similar to the current listed prices,” said the Emkay report. “While we believe that pricing is not aggressive enough as per Jio standards, it is trying to play big in the replacement market and middle-of-the-pyramid subscribers as upfront cost and monthly EMI for the non-data users looks high. Strong acceptance of JioPhone Next in the replacement phone market could potentially pose a risk to Bharti’s subscriber base.”
According to analysts at Kotak Institutional Equities, “The evident lack of pricing aggression with JioPhone Next is a welcome change and it may prevent any meaningful disruption for other telecom operators, in our view. Interestingly, it also seems a less attractive proposition when compared to Airtel’s recent cashback scheme on a wide variety of new 4G devices.”
Investors would reckon that Airtel announced its ₹6,000 cashback offer in October which is applicable on many phones from brands including Samsung, Oppo, Realme, Nokia, and Lava. This offer is valid on the purchase of smartphones that are priced up to ₹12,000.
Analysts at the domestic brokerage house believe that these plans are unlikely to cause any major disruption and hence, the stage seems set for the operators to raise tariffs for the prepaid smartphone segment and improve economics in due course. Livemint
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